The Weather Channel’s Misleading Spin on Trump’s Reference to Solyndra

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Politics is in the air….. and on the air everywhere.  Looking to check on the latest long range forecast today, I came across Carl Parker of the Weather Channel discussing the economics of the federal government promoting renewable energy.  This must have been in response to last night’s debate when Donald Trump replied to Hillary Clinton’s comments on how the federal government needs to continue its push for renewable energy.  Trump answered with the financial debacle of when our government gave funds to assist in a solar panel start-up.  While he did not mention Solyndra specifically, he reminded the audience of the $500 million the failed start-up cost taxpayers a few years ago.1

Mr. Parker countered that federal expenditures have amounted to $34.2 billion for all renewable energy sources.  He pointed out that defaults have amounted to a very low 2.28%.  He added that revenue from all of these projects has put the federal government in the black by $30 million.

The tone in which it was presented and the tendency of many viewers to hear data without scrutiny made it sound as though this has been a good thing for us citizens.

But is it really?  Earning $30 million on $34.2 billion over several years amounts to a total return of just under 0.9%…. How many civilian companies, not to mention financial firms, would have a chance of staying in business with that rate of return over just one year?  Perhaps as the Republicans have suggested for a long time:  when it comes to advancing new technologies, leave it to the entrepreneurs and don’t allow the government to try to pick winners.

 

1 – “Why the Solyndra mistake is still important to remember,”  by Katie Fehrenbacher, http://fortune.com/2015/08/27/remember-solyndra-mistake/, 8/27/2015.

Another Case of Well-Meaning People Not Understanding Math and Fairness

For years we have heard accusations of unfairness when the wealthy receiving greater dollar amounts in tax breaks when an across-the-board easing of taxes occurs.  It’s somehow discriminatory when people paying six figures in taxes receive several thousand dollars in tax breaks just because it’s more than the rebates received by those who pay only a few hundred dollars in the first place.

A recent business article shows that these irrational conclusions are alive and well.  The author was trying to make the point that upward mobility out of poorer neighborhoods is harder in part due to an unfair tax structure.  Changes are deemed necessary because of the following:

 “Some of this will require money, so funding priorities must also change.  As of 2014, U.S. households with an income of $200,000 or more received an annual subsidy (largely through the tax deduction on mortgage interest) of more than $6,000.  Households with an income below $20,000 received less than $1,500.  And only a quarter of the households that qualify for housing vouchers actually receive them.”1

It’s agreed that it’s an unfortunate waste of available opportunities if 3/4 of eligible households do not receive what the law can provide them.

But to claim an inequality regarding the data is misleading.  The wealthy receive 3% or less of their income when filing for the mortgage deduction.  Lower income families receive 7%.  Should the tax structure be skewed further in the favor of lower incomes so that they would receive the same $6,000?  This would be at least 30% of their income and undoubtedly more than the total they paid in the first place.

Let’s focus on making sure vouchers and other forms of assistance actually help people escape undesirable living conditions.  Just don’t use math disingenuously to paint a picture of unfairness where it doesn’t exist.

 

1 – “Helping Americans Move Out of Poverty, Bloomberg Businessweek ,May 23-29, 2016 issue.

 

British Take Giant Leap Forward with Brexit!

Brexit vote

FoxNews 2:26 AM today

Yesterday’s historic decision by the British to leave the European Union brings hope to those who oppose the ever encroaching arm of mega-government.

It was a courageous action in the face of warnings from Prime Minister David Cameron that such a move would endanger their economy and their ability to defeat ISIS (as if the EU was doing a good job in these areas!).  It was also a satisfying snub of our President’s attempts to intimidate them into following the liberal agenda of increasing big government’s oppression over personal freedoms.1

Big governments aren’t the answer to big problems, they are often the source of the problems.2,3  Many hope that this vote to leave will encourage other EU nations, who are tired of the elite ruling class in Brussels calling the shots, to do the same.

It’s time that various peoples get their countries back!…. Does this sound familiar?  🙂  

 

1 – Obama infuriates the Brits as he threatens to send UK ‘to the back of the queue’ if they vote to leave the European Union,” by Francesca Chambers, Euan McClelland and Matt Dathan, http://www.dailymail.co.uk/news/article-3553788/Obama-flies-Brexit-storm-President-faces-furious-backlash-downright-hypocritical-decision-tell-British-voters-stay-EU.html, 4/22/2016.

2 – “Reagan’s First Inaugural: ‘Government is not the solution to our problem; government is the problem,” http://www.heritage.org/initiatives/first-principles/primary-sources/reagans-first-inaugural-government-is-not-the-solution-to-our-problem-government-is-the-problem

3 – “Socialization also presents dangers.  Excessive intervention by the state can threaten personal freedom and initiative.  The teaching of the Church has elaborated the principle of subsidiarity, according to which ‘a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to co-ordinate its activity with the activities of the rest of society, always with a view to the common good.’” Paragraph 1883 from the Catechism of the Catholic Church, second addition, Libreria Editrice Vaticana, 2000.

Speaking of “common good” – “The common good consists of three essential elements: respect for and promotion of the fundamental rights of the person; prosperity, or the development of the spiritual and temporal goods of society; the peace and security of the group and of its members.”  Paragraph 1925, Ibid.

 

The “Brexit” Choice: Short Term Pain for Long Term Stability?

 

British voters will go to the polls on Thursday for an issue possibly more important than choosing a prime minister as it will impact future prime ministers.

The issue:   to stay in the European Union or leave it.

The fear mongers against leaving will be convincing only if concerns for the immediate rule the day.  Yes, if Britain leaves, it must renegotiate trade deals with the countries it is separating from.  These new agreements could very well be less advantageous.  Also true, there may be some pullout of investment from current fellow EU comrades.

HOWEVER, the foolishness of the EU’s common currency (the “euro” which the UK would eventually need to adopt), is a far greater negative.  The euro joins many countries of varying levels of fiscal responsibility.  Several countries using the euro seem to believe that they can have their cake and eat it too.  As of last summer, six EU countries had debts greater than their GDP!  While the UK’s was ninth highest in the EU, hanging around with these rising debt nations only consoles them if they accept “misery loves company.”1  A few years ago, Germany was actually criticized for responsible managing of its trade balance.2  In addition, as of late last year, just eight EU nations had average working hours exceeding ours in the U.S. while fifteen worked fewer hours per week.3  Despite working less, several of those nations have well-known expectations of benefits which aggravate economic struggles.4

Britain has a chance to separate itself from an unsteady large ship known as the EU.

The choice is theirs.  They can stay with a modern day economic Titanic with its mesmerizing marketing glitter — and its fatal flaws.  Or, they can choose to guide their own smaller, less “cool” ship where rational decision-making is an everyday necessity.

If they choose this, they will be more likely to succeed because they will have their head on the wheel instead of partying on deck, blissfully ignoring of impending dangers.

If they stay, they will inevitably be dragged down with the rest of the EU because its reach is clearly beyond its wisdom… Besides, “President Obama sparked fury by pressuring UK to stay in the EU and telling its citizens their nation’s stranding (sic) would be diminished if it leaves… London Mayor Boris Johnson accused him of making an ‘incoherent’ and ‘inconsistent’ argument because the U.S. would never give up sovereignty.”5  Obama’s near-command for Britain to stay is a solid argument for them to leave the EU!

1 – “European debt crisis: It’s not just Greece that’s drowning in debt,” by Ashley Kirk, http://www.telegraph.co.uk/news/worldnews/europe/greece/11705720/European-debt-crisis-Its-not-just-Greece-thats-drowning-in-debt.html, 6/29/2015.

2 – “A Common Currency (Euro) is Europe’s Real Problem, Not Germany’s Trade Surplus,” https://cartaremi.wordpress.com/2013/03/12/a-common-currency-euro-is-europes-real-problem-not-germanys-trade-surplus/, 3/12/2013.

3 – “Americans Work Hard, Nut People in These 15 Countries Work Longer Hours,” by Benjamin Snyder and Stacy Jones, http://fortune.com/2015/11/11/chart-work-week-oecd/, 11/11/2015.

4 – “France’s unemployment benefits are among the most generous in Europe, payable even for net salaries of €6,959 (£5,021) per month. That may seem to favour high earners in a country where the average monthly net salary is just over €2,000, however a spokeswoman for UNEDIC, which administers the benefits says that less than 1,000 unemployed people receive the top amount, out of a total 2.6 million claimants. The current system, negotiated between unions and employers last year, kicks in after four months’ employment. Workers aged under 50 can claim unemployment benefit for two years, while those aged over 50 can claim for three years. On average, benefits are about 65% of employees’ salary… Compensation for sick leave in Norway is often described as the most generous in the world: employees receive 100% of salary from day one for up to a year. But sickness absence is high, seen as a symptom of hidden, structural unemployment. Almost 7% of the workforce are on sick leave at any given moment – by far the highest rate of work absence among full-time employees in the industrialised countries, the OECD says…” from “Which are the best countries in the world to live in if you unemployed or disabled,” by Anne Penketh, Kate Connolly, Stefanie Kirchgaessner, Henry McDonald, Justin McCurry, David Crouch, Shaun Walker, David Smith, Mary O’Hara and Anna Bawden, http://www.theguardian.com/politics/2015/apr/15/which-best-countries-live-unemployed-disabled-benefits, 4/15/2015.

5 – Obama infuriates the Brits as he threatens to send UK ‘to the back of the queue’ if they vote to leave the European Union,” by Francesca Chambers, Euan McClelland and Matt Dathan, http://www.dailymail.co.uk/news/article-3553788/Obama-flies-Brexit-storm-President-faces-furious-backlash-downright-hypocritical-decision-tell-British-voters-stay-EU.html, 4/22/2016.

Link

Many activists and presidential candidate Bernie Sanders have defined their version of a “living wage” to be a minimum of $15 per hour.Unfortunately, this cause gained some momentum last year as “Fourteen cities, counties and states approved a $15 minimum wage through local laws, executive orders and other means in 2015.”2

Cost  of  Living  Varies  Widely  Among  the  States

A national minimum wage of this magnitude makes the careless assumption that the cost of living is relatively equal across our country.  Not the case!

For 2015, the cost of living in California and New York was close to 35% above the mean for all states.3  For an “average” state such as Florida, it only takes $11.10 per hour to create the same economic climate for an employee as $15 does in California and New York.  Why should Florida be forced to effectively pay nearly $4 per hour more for the same work?

The absurdity is worse for states with below average costs of living.  Mississippi’s was 16.5% below the U.S. mean for last year.  A citizen of the Magnolia State would do as well on $9.28 per hour as his counterparts in California or New York would do on $15.  Requiring Mississippi to have a $15 minimum is as ridiculous as pushing California and New York to $24.25 —  a guaranteed method of raising machine employment at the expense of humans.

States  Are  Different  Despite  Simplistic  Liberal  Beliefs

For decades, the Left has confused equality with being identical.  The concept of a national minimum wage is just one of their futile attempts at creating fairness by legislating sameness among the inherently different.  Some national policies are unwise.  For at least two millennia, it has been shown repeatedly that the best policies result when problem solving occurs at the lowest effective level.4,5    

The U.S., with its diversity of geography, cultures, economic climates, etc., does not lend itself well to many across-the-board mandates because they can often be destructive.  A national minimum wage of $15 per hour is one of them.

1 – “Bernie Sanders is The Only Presidential Candidate Who Supports $15/Hour Minimum Wage,” by Jason Easley,  http://www.politicususa.com/2016/04/04/bernie-sanders-presidential-candidate-supports-15hour-minimum-wage.html, 4/4/2016. 

2 – “14 Cities and States Approved $15 Minimum Wage in 2015,” http://www.nelp.org/news-releases/14-cities-states-approved-15-minimum-wage-in-2015/, 12/21/2015.

3https://www.missourieconomy.org/indicators/costof living/

4 – “… Excessive intervention by the state can threaten personal freedom and initiative.  The teaching of the Church has elaborated  the principle of subsidiarity [emphasis retained], according to which ‘a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to co-ordinate its activity with the activities of the rest of society, always with a view to the common good’… The principle of subsidiarity is opposed to all forms of collectivism.  It sets limits for state intervention…”  — excerpts from paragraphs 1883 and 1885 of The Catechism of the Catholic Church, second edition, published by Libreria Editrice Vaticana, March 2000.

5 – So as to avoid confusing the real meaning of “common good” with the one currently in vogue (that it’s whatever benefits the most, even at the expense of individuals):  “The common good comprises ‘the sum total of social conditions which allow people, either as groups or as individuals, to reach their fulfillment more fully and more easily… The common good consists of three essential elements: respect for and promotion of the fundamental rights of the person; prosperity, or the development of the spiritual and temporal goods of society; the peace and security of the groups and of its member.”  Paragraphs 1924 and 1925, Ibid.

Don’t Let Economics Fool You Into Rationalizing Wrongful Actions

The article in last Monday’s Cincinnati Enquirer read “Advocates push for syringe exchanges.”It described an advocacy group’s concern that an increase in intravenous heroin use by white males was leading to higher rates of HIV and hepatitis C.  They were going to approach the Hamilton County health board with a request to set up a syringe exchange.  Their request included a program “to offer clean heroin preparation materials, such as cotton and a small heating dish commonly referred to as a spoon or cap, as well as two applications – either nasal spray or an injection – that can reverse the effects of an opioid overdose by restoring the victim’s breathing.”2

As much as we white males might appreciate a little recognition in our politically correct society, this is detrimental to everyone.  Money is an important aspect of our lives, but we must not allow it to obscure the real issues.  Just because “Naloxone kits cost about $40,” and “bought in bulk, syringes cost pennies” plus “the lifetime cost of treating a hepatitis C infection can run from $350,000 to $600,000” are not reasons to forget that the real problem is addiction.

“Used needles are frequently discarded by heroin users in public spaces…” was another reason given to create a needle-exchange program.  While this might partially reduce innocent citizens from being exposed to danger, it is still a case of treating a symptom and not the “disease.”   Citizens face greater overall risk from the crime that ensues from addicts’ needs.  Next, we’ll be hearing about federal subsidies under the HHS mandate to lower the cost of heroin, and thus, reduce crime…

And that “187 municipalities across the United States have needle-exchange programs” (according to program advocates) isn’t jermaine to the argument either.  “Everyone does it” didn’t work when we were teenagers and it doesn’t work in the adult world despite political rhetoric to the contrary.

Why do destructive or disordered behaviors tend to bring out the “enabler” in us as a society?  Instead of facing a social problem squarely, we lean on “they can’t help the way they are wired” or “we’ll appear judgmental.”  If we’re going to help fellow citizens improve their lives, let’s attack the root causes.  In the end, it will lift them up and ultimately all of us.

 

1 – Cincinnati Enquirer, by Mark Curnutte with Terry DeMio contributing, 4/8/2013
2 – The use of the word “victim” is a clever euphemism.  For example, if one drives a car too fast for the conditions and loses control of the vehicle, is the driver a “victim” of the laws of physics?

A Common Currency (Euro) is Europe’s Real Problem, Not Germany’s Trade Surplus

Background

David Wessel’s 3/7/2013 article in The Wall Street Journal, “A Chinese Lesson for Germany,” compared China’s dealing with its trade surplus to the track Germany has taken.  It began with the surprising statistic that Germany’s trade surplus as a percentage of GDP is 6.4% compared to China’s 2.6% down from its peak of 10% in 2007.  The purpose of his writing was to say that China’s monetary policy was more beneficial to its economy, with a side benefit to the rest of the world, while Germany’s stubborn goal of significant trade surpluses was hurting Europe as a whole.

Does  a  Stagnant  World  Economy  Mean  Some  Virtues  Are  to  be  Discouraged? 

Mr. Wessel acknowledged that at any given time there will be both net importing and net exporting countries.  However, his main concern was that in this particular economy which “is starved for demand,” a non-growing global economy means “a strong economy (Germany’s) that runs a big trade surplus is taking away someone else’s lunch.”  He went on to say that this problem “is particularly acute in Europe” because “Southern Europe is struggling to increase exports and use the proceeds to pay debts.”  So, is this to suggest that Germany is the bad guy because its disciplined economy does not have to pay the pied piper as other countries must?

“Every decrease in the trade deficits of Portugal, Spain and Italy has to be matched by a decrease in someone else’s trade surplus.”  True, but why must it be Germany’s?  Is it the main exporting opportunity for these countries?

“China  Gets  It”

Oh, really?  After years of not allowing its currency to seek its true value in the world market, now they are to be praised?  “It has allowed its currency to rise against those of its trading partners, which makes its exports less attractive.  It has spent heavily on investing in everything from steel mills to airports.It is allowing labor shortages to push up wages, which gives consumers more spending power.2… China’s leadership preaches the virtues of enhancing people’s ability to consume.3   And the yuan hasn’t been replace with a common currency either.

Germany’s  Approach

The writer didn’t hide his slant with: “The rigid German business model dates back to the 1950s… Germans saved a lot, and spent less.  Producers relied more on selling to foreigners.”  He should have respectfully called it a “disciplined” business model, but he couldn’t with the Chinese “virtues” just mentioned.  And, in the U.S. we have the problem of not saving.  Do we have any experience with excessive saving?

How  the  Euro,  or  Any  Common  Currency,  Restricts  Natural  Market  Forces

As the writer recounts the normal activity of an unrestrained currency: “A period of strong exports and growing trade surpluses would push up the deutsche mark.  The rise in the currency would curb exports.  That would increase unemployment, and laid-off workers rarely moved to other industries.  That, in turn, would provoke a burst of productivity that restored international competitiveness; exports would rise again.”  Wouldn’t the decrease in exports also see the rise of imports, increasing some jobs at least?

Anyway, the writer “gets it here.”  He says, “The advent of the euro disrupted the usual equilibrating move in exchange rates.  If Germany still had the mark, the currency would be soaring, diminishing exports.  But the mark has given way to the euro, and the Continent’s woes restrain the currency from climbing.”  So, even though the problem is caused by the common currency, we see him blaming the German people for being industrious with: “So Germany enjoys an export boom.  Its advice to the rest of Europe: We made our manufacturers more competitive.  We cut our budget deficit.  You should, too.”  Is he mocking those who reap the benefits of honest hard work.  Just a moment, did President Obama write this?

Must  the  Euro  Be  Saved?

That seems to be Mr. Wessel’s point.  He went on: “That approach (Adam Posen’s statement that Germany sees export success as a goal rather than a means to an end4), though, threatens the viability of the euro.  It threatens the prospects that Southern Europe will be able to pay back the loans that Germany’s savers, banks and governments have made to them.  It hurts the global economy.”  But, it appears that by eliminating the euro and the deutsche mark would correct the situation.  

And  Keynes  to  the  Rescue!

“Keynesian textbooks prescribe more government spending and bigger budget deficits for Germany, but that’s not going to happen.”  Perhaps, because the Germans have seen what unbridles Keynesian economics has done for the U.S. and others?

He adds, “A surge in business investment would be welcome, but companies aren’t so inclined.”  Even if they are as selfish as this article implies, German businesses will be smart enough to reinvest to keep their implied greed satisfied.  Believe me.  They didn’t achieve this success, in the midst of irresponsible countries everywhere, by being stupid.

Concluding  Remarks

“Reducing a trade surplus to zero essentially means a society consumes as much as it produces.  The notion that consuming what you produce is punishment is uniquely German.”  He closed with, “Perhaps Germany could learn a little something from China.”  For what?  For being successful while maintaining a free society?

This article is uniquely socialist in its indignity.  The German people have no need to apologize.  And with that, no further questioning, I rest my case.

1 – and major pollution, but that’s another story (see “Beijing Pollution Hits Highs,” by Wayne Ma, The Wall Street Journal, 1/14/2013 and “Japan seeks cooperation with China on smog problem,” by Elaine Kurtenbach (Associated Press), Cincinnati Enquirer, 2/10/2013)
2 – until inflation sets in, of course
3 – “China, virtue and consume” in the same sentence?  Who would have thought?  Baby Boomers and their parents getting dizzy about now?
4 – Adam Posen of Washington’s Peterson Institute for International Economics